The Trade Induced Degradation Hypothesis
Abstract
This paper develops a simple two-sector dynamic model to examine the effects of international trade when government policy regarding the environment is short-sighted, but still responsive to changes in income levels and in the quality of the environment. We show that free trade can usher in a negatively reinforcing cycle of increased pollution, lower environmental quality, and lower real incomes. Such cycles are not possible in autarky. We link the potential for trade to cause large environmental consequences to the structure of tastes and technologies and the attributes of industrial pollution.Suggested Citation
M. Scott Taylor and Brian R. Copeland. "The Trade Induced Degradation Hypothesis" Resource and Energy Economics 19.4 (1997): 321-344.
Available at: http://works.bepress.com/taylor/28